KATHMANDU, Aug 29: Nepal Rastra Bank (NRB) has relaxed the ceiling on the working capital loans for manufacturers.
As per the revised rule, the manufacturing units can utilize the working capital loans facility for up to Rs 30 million. As of now, the firms in overall can utilize the working capital loans of up to Rs 10 million.
The central bank through revising the Working Capital Loan Guidelines 2022 has turned flexible in this matter. The private sector had been demanding the NRB to scrap the guidelines since the new rule was enforced.
Revised interest rate corridor system introduced
A working capital loan is a loan that is taken to finance the day-to-day operation of a company. These loans are not issued to buy long-term assets or investments. In this category, Nepali banks issue cash credit, short-term loans, import-export related loans and term loans.
In a circular issued on Monday, the central bank provided relief to the manufacturing sector, thereby giving a boost to the country's productive segment. According to the NRB, the conditions will be applied to an industry that adds value to raw materials or semi-finished goods through human effort or machinery.
For the productive sector, businesses with an annual turnover exceeding Rs 30 million and up to Rs 40 million should consider an amount equivalent to 20 percent of their turnover when determining the working capital loans. The same rule will be applied to loans above Rs 10 million and up to Rs 20 million for other sectors.
Banks are now allowed to offer working capital loans up to 50 percent of the maximum annual turnover based on the industry, business, or operating cycle of the companies. This is an increase from the previous limit of 40 percent.
